The New York Times is reporting – based on something Eric Schmidt said to someone at a party – that Google is working on its own Android operating system-based tablet:

Google, for example, has been working with several hardware manufacturers to push its Android software, which was originally designed for mobile phones and is a direct competitor to Apple's iPhone operating system. The company also hopes to make its own apps marketplace available for new slate-like devices.

But Google is going one step further, exploring the idea of building its own slate, an e-reader that would function like a computer.

Eric Schmidt, chief executive of Google, told friends at a recent party in Los Angeles about the new device, which would exclusively run the Android operating system. People with direct knowledge of the project – who did not want to be named because they said they were unauthorized to speak publicly about the device – said the company had been experimenting in "stealth mode" with a few publishers to explore delivery of books, magazines and other content on a tablet.

Mr Schmidt didn't stop there. He acknowledged that "Google might not get it right the first time," and said that Apple probably wouldn't either, briefly alluding to some better features coming with the second generation of the iPad. But he said both companies would have "the next two to three years to figure it out."

According to a guest at the party, Mr Schmidt offered one other piece of information: the Google device will run Adobe Flash content and games.

Wired's Gadget Lab notes that with Google committed to open platform, "A Google tablet could be the only tablet capable of actually challenging the iPad, avoiding the iPod whitewash in which Apple thrashed everyone, even Sony."